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Mortgage broker borrows 33% of refi loan and then files bankruptcy

I heard a very odd story today... A mortgage broker worked a refi deal with a client, and borrowed 1/3 of the cash out amount from the client... soon after, the broker declared bankruptcy, and informed the client that they would not be paid back. The client is now in foreclosure.

The lender, Argent, purchased the property themselves at the foreclosure sale, and so far has allowed the "owner" to remain in the house.

I cannot say what made the client lend the broker the money, nor can I understand why the broker would actually have borrowed it from the client, but all this si not very sound business, and smacks of an unethical transaction. It appears there may be a class action to be filed with similar cases with other borrowers and this broker, and other brokers representing Argent.

As I hear more, I will post the news here.

Paul Silver, Owner

Focus Professionals, Inc.

Rhode Island Real Estate Services

Posted by Rhode Island Real Estate, Buyers Agents, Paul Silver on 11/05/2007 11:40 AM

Comments (12)

mortgage brokers, mortgages, lenders, mortgage fraud, truth in lending, unethical conduct

12 Comments on Mortgage broker borrows 33% of refi loan and then files bankruptcy

NOV

2007

Paul,

This client should report this to their state agency that oversees mortgage brokers. It dismays me to here that there may be other victims. Unfortunately if this individual has filed bankruptcy there will probably be nothing that can be done in that arena of federal law. as bankruptcy stops all lawsuits if the individuals have been named as creditors.

But if the client comes forward and others do as well to the state agency at least there maybe fraud charges that can be filed and jali time if convicted.

Marie: the case is being brought to the state's Attorney General, who will be acting... that attorney is seeking arrest of the broker.

We shall see what happens.

Thanks for your comment.

Geez Paul! This is some scary business! What was the reason/excuse for borrowing the money? Keep us updated!

So far I don't the reason for borrowing the money, but this is just crazy, as you say...

NOV

2007

I hope this correcting market weeds out unethical brokers such as this one.

™

So do I Ricardo...

amazing................ but then again - I am not amazed....

It sounds like fraud to me. I think they are all in it together. Also, that is bankruptcy fraud and should not be a dischargeable debt. If the client did not file a claim w/bky court then maybe there is more to this than we can see. Something is not adding up here.

NOV

2007

In Canada, we are watching all the mortgage transactions, foreclosures etc. taking place in the States, hopefully we will learn from your experiences.

I just know one of the attorneys handling the case... and of course, he cant disclose too much at present, but for certain this lawyer is trying to have the broker arrested, if possible, never mind civil issues for litigation... we shall see how it pans out...

DEC

2007

Something certainly stinks in this transaction and I would love to find out what other promises were made to the home owner prior to this transaction.

Paul, This just amazes me. Just when you think you heard it all..lol

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